(Corrects paragraph three to say that the company sued the
government in June and not May)

July 2 (Reuters) - Troubled lender Doral Financial Corp
said an appeals court in Puerto Rico reversed a lower
court's ruling that it lacked jurisdiction to hear a case
stemming from its tax dispute with the island's government.

Doral's shares jumped as much as 70 percent to $6.86
Wednesday on the New York Stock Exchange.

Doral, one of the biggest Puerto Rican banks, sued the
government in June for voiding an agreement that required the
Treasury Department to pay the company about $230 million in tax
refund.

The appeals court said the lower court erred when it ruled
that it lacked jurisdiction to hear the case and ordered it to
hold a hearing in which the Treasury Department must prove the
basis for voiding the agreement.

The company had received a letter from the Federal Reserve
Bank of New York in May stating that it must classify the tax
agreement as a loss and write off the asset.

Doral, whose business has been affected by a slowing Puerto
Rican economy, had said it could sell assets to meet regulatory
requirements.
(Reporting by Tanya Agrawal and Neha Dimri in Bangalore;
Editing by Saumyadeb Chakrabarty)